EAGLE COUNTY, Colorado — There's a small pool of potential home buyers out there, and in a real estate market that is mostly discretionary — second homes are not a necessity — sellers are competing hard to attract those buyers.

While the year has begun on track with where 2010 started, the Eagle County real estate market still has a long way to go before it sees the kind of dollar volumes it had in 2006-07. Transactions, however, are on the rise and local brokers say that's a good sign.

“That's a positive trend for our market,” said Kyle Denton, an associate broker with Ascent Sotheby's International Realty. “Price will follow, but it's going to be a while.”

Denton said rumors and reports that show luxury real estate prices in this market haven't dropped are simply untrue. He said there's been about a 25 percent to 30 percent decline in luxury real estate prices on average in the valley, with some discounts reaching as high as 50 percent.

He doesn't agree with trying to falsely bolster the market in an effort to get buyers to step up and buy something, a tactic he said some brokers try.

The Aspen market, for example, began heavily advertising price decreases and deals, which resulted in a lot of buyer activity in the last year, especially in the high end market, Denton said.

“Prices have had to come down substantially to get buyers to engage, and rightfully so,” Denton said. “Our market, as great as it is having Vail Mountain right outside our doors, is a discretionary purchase for a lot of these people.”

Market value

Larry Agneberg, of Prudential Colorado Properties, said there's no doubt that prices have dropped, but the developers of the newer projects in particular are doing everything they can to maintain “price integrity,” if for no other reason than to “not piss off the people who already bought.”

Agneberg said many of the sale prices reported in Eagle County that might not show any obvious discounts likely had discounts.

Buyers might have asked the developer to pay five years of their condominium association dues or to throw in some furnishings.

“(The sellers) still get to report their full price and show they haven't discounted, but they're giving money back at closing in the form of credits,” Agneberg said.

The Ritz-Carlton Residences, for example, is offering a promotion now that includes two lifetime ski passes to Vail, as well as membership into the private Arrabelle Club. Vail Resorts had already discounted its Ritz-Carlton prices by about 15 to 20 percent, depending on the unit, back in 2009, and only the brokers and the buyers know what else is being included in a sales price, Agneberg said.

Some properties still sell for what appears to be above market value, but those properties often have a story behind them — the buyer fell in love with the place or there's something unique about the property, brokers say.

Then there are the sellers who are just living in the past by listing their properties at 2007 prices.

“We were all drinking the same Kool-Aid back in the heyday, and I think some sellers are still drinking the Kool-Aid,” Agneberg said. “For the ones who have stopped drinking it, deals are getting done.”

The successes of sales done at the prices from the old days can sometimes boost sellers' hopes that they, too, can get their sales done at higher than market value prices, which is why Denton said it's a broker's job to make sure sellers know why some of those higher-priced sales were able to get done.

Without understanding the market, there can't be an effective engagement of buyers, Denton believes.

The buyer pool is so small now, too, that brokers and sellers can't afford to mislead people or scare them away.

“There are not a lot of buyers out there, and the buyers out there are looking for market value,” Denton said.

There are also a lot of questions out there about the economy and whether or not the recession has reached the bottom yet.

“We're certainly not climbing out of anything right now,” Denton said. “It feels better year after year, but we still have a long way to go.”

Community Editor Lauren Glendenning can be reached at 970-748-2983 or lglendenning@vaildaily.com.